Question

Discuss what you think are the three most important reasons that management needs to know the cost of a job, and what an effective manager might do with this information

Answer 1

Answer:

Cost of a Job/Job costing- It is the accumulation of cost of material, labor and overhead for a particular job. When a company's products are not identical then job costing is very effective tool to allocate the cost of each product.

Use of Job costing for managers:

• It enables managers to keep a track of costs of job on regular basis. This helps in cost minimization.
• It tells managers the amount of material, labor and overhead spent on a specific job.
• It tells managers, whether the cost is increasing or not, if cost is increasing then steps can be taken to reduce the cost of the specific job so that profit can be maximized.